Daily Brief Industrials: Alps Logistics, Nippon Yusen Kk, HD Hyundai Marine Solution , Mitsubishi Heavy Industries, Innospace, Qantm Intellectual Property, Roper Technologies, Mastech Digital , Jetblue Airways and more

• There was a news article I missed in late February saying Alps Alpine (6770 JP), parent of Alps Logistics (9055 JP) was in the process of selling the logistics unit.
• A deal made sense for a strategic given the upcoming “2024 Problem”. Pre-close, headlines blared, the stock popped 12%, now we’re at double the end-February price.
• Late in the evening,Alps Logistics said it had received a bid from Logisteed but nothing had been decided. This morning we have a few more details, but nothing concrete

• Last May, Nippon Yusen Kk (9101 JP) announced buybacks of ¥200bn over 2 years. In August, they changed it to say  ¥200bn in the next nine months.
• That helped support the stock through early March. It was big, and a decent percentage of ADV. Today, they announced earnings and guidance and another ¥100bn buyback through April 2025.
• Earnings were OK. Guidance is a little low vs the Street. The stock popped 5% from where it was trading. Lower impact vs 2023. More cross-holder overhang consideration. 

• After a 96.5% gain on listing day, HD Hyundai Marine Solution (443060 KS) is very close to levels needed for Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) inclusion in June.
• HD Hyundai Marine Solution needs to outperform the 50th ranked stock in the KOSPI2 INDEX by 11.4% on average over the next 15 trading days to be added to the index.
• Retail investors sold 25% of their allocation on listing day while foreign investors sold 22% of their IPO allocation with local institutions mopping up the shares.

• MHI’s stock fell 7% following the announcement of results. Guidance for FY3/25 missed analyst expectations
• Even so, MHI remains a key beneficiary of the global shift to clean energy and national policies aimed at bolstering national security 
• We remain bullish. The stock has performed well this year and but 13x EV/EBIT seems reasonable given the structural drivers

• Innospace is getting ready to complete its IPO in June 2024. According to bankers’ valuation, the implied market cap of Innospace is from 347 billion won to 434 billion won.
• Innospace engages in the satellite launch vehicle production and launch service business.
• The company estimates its sales to increase from 0.2 billion won in 2023 to 2.0 billion won in 2024, 47.8 billion won in 2025, and 97.2 billion won in 2026.

• Qantm Intellectual Property (QIP AU)‘s non-binding proposal from IPH Ltd (IPH AU) is at A$0.11 cash + 0.291 IPH shares per QIP share, a 4.5% premium to Adamantem’s A$1.817 offer.
• Since announcing the Adamantem non-binding proposal on 14 March, the IPH offer has been 4.3% higher than the Adamantem offer on average. 
• The IPH proposal also requires approval from the ACCC and NZCC. The presence of two bidders increases the probability of a binding proposal (with a bump). 

• It always seemed like a question of when, not if, IPH (IPH AU) would make an Offer for QANTM (QIP AU). IPH previously approached QANTM in 2018, but was spurned.
• Capitalising on ongoing extensions to Adamantem’s exclusivity, as it relates to its all-cash A$1.817/share Offer by way of a Scheme, IPH has now tabled an all-scrip, plus A$0.11/share dividend NBIO.
• IPH’s implied Scheme value of A$1.90/share is a premium to Adamantem’s proposal. The catch: apart from terms being indicative, IPH’s Offer requires ACCC and NZCC clearance.

• Roper Technologies had a robust start to the year, with double-digit growth in revenue, EBITDA, adjusted DEPS, and free cash flow noted for Q1, which has spurred an increased full-year outlook.
• The Q1 report highlighted the completion of another milestone for the company – the acquisition of Procare Solutions, a provider of software and integrated payments for the early childhood education market.
• The total revenue and organic revenue increased by 14% and 8% respectively while EBITDA saw a 16% growth, with EBITDA margin expanding by 60 basis points to 40.2%.

• Mastech Digital, based outside Pittsburgh, PA is an IT staffing business with a data and analytics, consulting, and project management service serving blue-chip customers in the US. Both businesses have been affected by the rapid decline in the economy and IT hiring as customers pull back.
• The company trades well below its peers and we expect stock price appreciation when it returns to growth aided by stock buybacks.
• It also plans to grow through acquisition.

• JetBlue Airways Corporation (JBLU) identified as an attractive short opportunity due to unsustainable competitive and financial position
• Struggling as sub-scale industry participant with shrinking margins, issues with GTF engines, and tough upcoming comps
• Predicted restructuring within next 2-4 years as JBLU faces challenges in overcoming fundamental issues and high debt levels

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.